Great misconceptions: There is a Nobel Prize for economics

Did Alfred Nobel (1833–1896) award a prize for economics? In November 1895, Nobel – who had made a huge fortune following his patent for dynamite in 1867 – signed his will providing for the establishment of the Nobel Prizes. He set aside the bulk of his huge fortune to establish annual prizes in physics, chemistry, physiology or medicine, literature and peace – but when was the Nobel Prize in Economics first awarded?

Historically Alfred Nobel never instituted a prize in economics. In 1888 a French newspaper prematurely published Nobel’s obituary, claiming that the inventor of dynamite “became rich by finding ways to kill more people faster than ever before”.

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To answer this charge Alfred Nobel wrote a will, which set aside the vast majority of his huge fortune for the establishment of the prizes. There were to be three in science: for eminence in physical science; in chemistry; and in medical science or physiology; a fourth for the most remarkable literary work “in an ideal direction”; and the fifth to be given to the person or society that renders the greatest service to the establishment or furtherance of peace congresses.

It was only in 1968 that the Bank of Sweden decided to institute the prize in economics in memory of Alfred Nobel’s great gift. Although the prize was to be administered by the Royal Swedish Academy of Sciences and the award made at the same time as the true Nobel prizes, the economics award is actually the ‘Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel’.

The prize has remained controversial even among winning economists. At the 1974 Nobel banquet, Friedrich Hayek said that he would never have advised the creation of the award as “the Nobel Prize confers on an individual an authority which in economics no man ought to possess”.

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